There is growing evidence that many childhood and adult diseases can be linked to environmental exposures during critically important stages of growth and development. Being born prematurely is a prime example of how the environment can adversely affect health later in life. Infants born prematurely have underdeveloped lungs that are not prepared to breath oxygen. They may also be exposed to excess oxygen used therapeutically to reduce tissue hypoxia and this can lead to bronchopulmonary dysplasia (BPD), a chronic lung disease seen in preterm infants needing supplemental oxygen. While many preterm infants eventually leave the hospital, they often suffer as children and adolescents from a variety of persistent pulmonary diseases (PPD), including reduced lung function and increased respiratory viral infections. Thus, there is an urgent need to understand how oxygen exposure at birth permanently disrupts lung development in preterm infants and how these persistent changes affect health and wellbeing later in life. To address this need, we developed a novel model by which mice are exposed to hyperoxia as neonates, recovered in room air, and then challenged with influenza A virus or bleomycin as adults. Analogous to children born prematurely, adult mice exposed to neonatal hyperoxia exhibit reduced lung function, mild alveolar simplification associated with reduced numbers of alveolar epithelial type II cells, learning deficits, and age- related hypertension. When infected with influenza A virus or administered bleomycin, adult mice exposed to neonatal hyperoxia displayed increased inflammation and fibrotic disease compared to siblings exposed to room air as neonates. While investigating how early-life oxygen exposure alters alveolar epithelial development, we discovered the oxygen environment at birth affects the expansion of type II cells. Relative to what is observed in room air, alveolar epithelial type II cell expansion is higher when mice are birthed into low (<17%) or high (60%) oxygen. This implies type II cell proliferation occurs optimally under low oxygen tensions, such as in the fetus, is reduced when exposed to room air levels at birth, and increases again at high oxygen tensions. This increased number of type II cells is then excessively pruned when mice are returned to room air. Because type II cells play an important role in innate immunity and function as progenitor cells following epithelial injury, their depletion could be responsible for altering how the lung responds to alveolar epithelial injury. Here, we test the hypothesis that the oxygen environment at birth controls proper expansion of type II cells, which are necessary to protect the adult lung from alveolar epithelial injury. Understanding how the transition to the oxygen environment at birth controls proper expansion of alveolar epithelial type II cells is important because it could lead to new opportunities for identifying and treating children born prematurely who are at risk for PPD.